Congratulations, you just successfully defended the lawsuit that was filed against you. The person who sued you is getting nothing, and you get to walk away with a sense of vindication…and a hefty legal bill. You may be surprised to learn that, if you are sued, you have to pay for your own attorneys’ fees to defend yourself. This is true even if you feel you’ve done nothing wrong, and even if you “win” the lawsuit. In the United States, civil litigation generally follows the “American rule”: each party pays his or her own attorneys’ fees, regardless of outcome. With few exceptions[1], it is very important to think about the cost of litigation when preparing to file or defend a lawsuit.
Let’s look at a typical divorce in Iowa. According to a 2015 Martindale Nolo Research study, the cost of divorce in Iowa typically ranges from $3,500 to $26,000[2]. Average attorneys' fees are $9,300. Of course, these figures can vary greatly depending on the complexity of the financial and family situation, not to mention the willingness of the parties to work together toward resolution. Divorces tend to involve less discovery[3] and trial work than more complex business disputes or other civil litigation. Therefore, attorneys’ fees in those more involved cases can easily get into the six-figure range. Working with your attorney to understand what sort of legal fees you’re looking at on a given matter should be one of the first things you do. It’s important to remember that initial estimates can be thrown off if unanticipated issues or difficulties arise, but having a ballpark figure from the get-go is a good idea.
It’s natural to want your day in court, especially if you feel you’ve been wronged by the other party. But having a clear understanding of the financial impact that Perry Mason moment may have on you can lead you to consider some alternatives. Discuss with your attorney whether it’s actually necessary to file or respond to that lawsuit—sometimes a phone call or letter to the other side can resolve the issue without need for expensive and time-consuming litigation. If you’re months in to a lawsuit, consider whether it might be a good time to bring up settlement negotiations or suggest mediation. Most importantly, listen to your attorney when they advise you on your likelihood of success at trial; if your odds are worse than 60-40, it may be time to reevaluate your expectations. Spending thousands more dollars to proceed through a trial, only to have the court return a verdict against you is an extremely disappointing note to end on.
Litigation is expensive—there’s no two ways around it. But making informed decisions along the way can keep your costs down. Have candid discussions with your attorney throughout the litigation process to ensure you walk away from the situation confident in the value you’ve received.
[1] There are certain types of actions, such as harassment and discrimination cases, where the other party may be required by statute to pay your attorneys’ fees. Similarly, if the suit is based on a contract (think a lease or purchase agreement) which has a provision stating that the prevailing party in a lawsuit will receive its attorneys’ fees, you may be able to recover. A word of caution: Nebraska does not generally allow for recovery of attorneys’ fees, even if the contract calls for it. Be sure to ask your attorney if any exceptions apply to your case.
[2] Nebraska and South Dakota have similar statistics, with typical Nebraska divorces ranging from $3,000 to $23,000 and average attorneys' fees of $8,200, and typical South Dakota divorces ranging from $3,500 to $25,000 and average attorneys' fees of $8,600.
[3] The process of exchanging information related to a lawsuit via requests for production of documents, formal questions to the other side, depositions, and other means.
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